Barred from generating and accessing profits from gold produced domestically or at their mining investments abroad, sanctioned Russian entities and individuals can evade restrictions imposed on them if they engage in gold and money laundering to disguise the origins of the gold and the beneficiaries of gold profits.
Therefore, there is likely to be increased demand for the services and connections of transnational criminal networks that offer these services, a new report by the Global Initiative Against Transnational Organised Crime (GI-TOC.) has concluded.
Sanctions imposed create the motive to engage in illicit gold markets according to Going for gold: Russia, sanctions and illicit gold trade, which flags that sanctions imposed by the EU, US and UK effectively bar Russia from traditional financial and gold markets, including the UK, traditionally by far the largest export destination for Russian gold.
India, China, UAE and Turkey
GI-TOC warns of risks in a few notable international gold trade hubs that abstained or did not vote on the UN Resolution condemning the Russian invasion of Ukraine.
India and China, the world’s largest gold consumers, abstained; the UAE and Turkey, while supporting the UN resolution, have sent mixed signals on their stance on Russia and sanctions regimes.
Africa
Russia could use its influence in West Africa to exploit illicit gold markets and gold laundering, including with the governments of West African gold producers Mali and the Central African Republic. To protect its interests in gold and other assets, Moscow has reportedly deployed its notorious paramilitary, the Wagner group, to the region.
Risks are presented by the presence gold mines majority owned by Russian entities and warm relations between Moscow and African host governments. For example, Nordgold, which has operations in Burkina Faso and Guinea, is majority owned by Alexey Mordashov, reportedly Russia’s richest person and a target of new EU sanctions
Central Asia
Kazakhstan, Kyrgyzstan and Tajikistan abstained from the UN resolution to condemn Russia’s invasion of Ukraine, while Turkmenistan and Uzbekistan were not present to vote.
The risks in this region are hard to determine according to GI-TOC which says there is limited information available on gold flows (licit or illicit), as well as on artisanal and small-scale gold mining in the region.
Recommendations
There are various ways Moscow and other sanctioned actors could use organised criminal networks and the gold sector to evade sanctions. There is therefore a pressing need to identify and address organised criminal networks that are linked to the gold sector and could be exploited by Moscow and other sanctioned entities to evade sanctions the report concludes.
It says there is also a need for continued monitoring and analysis to inform proactive measures for pre-empting, tracking and responding to gold and money laundering activity that stems from sanctions.
GI-TOC’s report, Going for gold: Russia, sanctions and illicit gold trade, can be found here.
Categories: Trade Based Financial crimes News
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